Thanks My Ladies for letting us share from your private chatroomMEMPHIS: Yesterday (or was it the day before) I wrote a bit about the inherent problems that always arise with a reserve currency that also serves as a domestic currency. Armstrong has today written directly on the topic and I would be remiss in not pointing to it. It is well known to those here that the world is slowly transitioning away from it's dependence on our currency and so my intent is that we have an appreciation for the "why" for it is in this level of understanding that we can appreciate the vastness of what is taking place. In so doing we can hopefully discern some of the effects that this will have on us personally for this shift away from the USD is a planned one. It is being carried out with great intent and purpose and in further study we can (I believe) draw some conclusions as to what the future will hold by looking back to history!....

Recall a basic tenant that I shared earlier that is so very important to be held onto: "In the extremes, any nation will always do what is in their own best interest." This has an important application to the discussion of the USD as a world reserve and if anyone does not accept the above as being a basic truth then we ought to pause and talk about it! This is certainly not easy stuff to convey in a few words but if you'll bear with me what follows is some quotes taken from today's blog with my attempt to illuminate them. [Here we see evidence of domestic pressure to do what's best for America] "...the Fed is in a box and unless they raise rates, the next crisis in pensions will wipe out far more than most people anticipate." [Now we look at external forces pulling the opposite] "...everyone from the IMF to most other countries are begging the Fed not to raise rates for there are some $9 trillion dollar shorts out there." [Compounding the problem we now read of other issues constraining the FED such as the servicing of our debt which is now tilted heavily to short term paper] "...It is also true that cash is rushing into the short-term government paper (flight to quality) and raising rates will escalate the federal budget..." [now we point to the real culprit: the USD being the world reserve] "This entire problem illustrates that this is not merely a dollar and Sovereign Debt Crisis; this is also a RESERVE CURRENCY crisis." "The IMF and other nations are pressuring the Fed not to raise rates because of external economic conditions. The Fed is caught in a real crisis where domestic policy objectives are being influenced by international policy of other nations — the INTERCONNECTIVITY. This is starting to peel back the layers of the global economy that are like an onion with everything connected." to read in it's entirety:http://www.armstrongeconomics.com/archives/35955 ****************MEMPHIS: it's quite the corner that the FED has painted themselves into! Years of low rates have favored the bankers and now it is soon to be time to come clean and raise rates or else sacrifice the entire pension system.In my mind I have equated a decision (to not raise rates) to that of waving the white flag of surrender. We do not want the FED to wave this flag and yet the alternative causes the world at large to suffer at the hands of our domestic policy decisions. Either way we can (and should) expect....consequences...

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MEMPHIS: Although I discount opinions in forming our model of the world it is helpful at times to use them for the purpose of forming an hypothesis to then be either proven or disproven (think geometry here).

One extreme possibility would be that the FED raises rates to protect any hope of the politicians maintaining order domestically and this then opens up (IMO) the possibility of a sudden and quite turbulent shift away from the USD.

"Sudden" and "turbulent" are words that the men (and women) behind the curtain generally avoid at all costs and so we are left to think further.

Here's a question that needs answering:

Is the IMF positioned to roll out the SDR as a global reserve in the near term? I do not profess to know the answer.

There have been hints that many debts have been denominated in SDR in recent years and yet this does not prove anything as there would need to be GREAT liquidity available for any SUCH quick and sudden "calling up to duty" of the SDR.

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HearingGod: My guess is that these people are not stupid and that the IMF is ready .... Mary has always said that the USD is not in near danger of sudden or drastic collapse .... In not sure that I agree and I think that if others don't realize the imminence of the sudden changes that could take place then the swing could be rapid. Just my thoughts